Depositors stay calm, shareholders panic. The government steps in with taxpayer money and guarantees. A few months later, banks' share prices plunge again, the government injects more capital, and so on.

No wonder people are angry. It's one thing to save, say, a Citigroup whose bad decisions helped create the mess to begin with. It's quite another when those rescues don't work.

Separate dross from goldAt a minimum, this means separating the banks from their so-called toxic mortgage-related assets. That's what is now slated to happen with Citi's breakup: One entity, called Citicorp, will handle commercial, retail, and investment banking; the other, Citi Holdings, will hold everthying else, including an estimated $301 billion in risky assets. Much of these assets are to be sold off or worked through.

The split essentially returns the banking entity of Citigroup to what it was in 1998, when it led the charge to repeal the Depression-era Glass-Steagall Act. For six decades, the act kept banks from speculating in risky investments - the kind of investments that last year humbled Citigroup and sunk Lehman Brothers and other big-name financial institutions.

Dragged down by Merrill Lynch

Bank of America's problems also loom large because it agreed to buy Merrill Lynch, an aggressive player in those risky mortgage-related securities, which itself lost $15.3 billion last quarter. (Those results are separate from Bank of America's, because it didn't take over until Jan. 1.)

The stocks of both Citibank and Bank of America have lost about 80 percent of their value since the end of September.

These problems are also dragging down shares of other banks, even those that are far more healthy. That is why the calls for quick and decisive action are becoming more urgent. Perhaps that means a government entitiy that takes over those bad loans a la savings and loans crisis or, in the extreme, a partial or full nationalization of banks.

"If we've learned anything from the last Citi bailout, it's that small interventions don't work," writes economy blogger Felix Salmon of Portfolio.com , who urges nationalization. "What's needed now is a complete revamp of both banks' capital structures, and a brand-new owner."